MicroCapital » Regulation

MICROCAPITAL BRIEF: Mexico, Indonesia, Haiti Use Tiered Savings Account Requirements to Promote Financial Inclusion

Natalie Baer — Fri, 10 Feb 2012 15:07:40 +0000

Mexico, Indonesia and Haiti are responding to the challenge of balancing financial access with security by creating tiered requirements for savings accounts. In 2011, Mexico proposed implementation a four-tier account system, with the lowest tier including monthly deposits of up to USD 280. These “Level 1” accounts would be “anonymous,” though the details of how they would be implemented have not yet been determined. At the other end of the spectrum, deposits over USD 3,860 require both photo identification and a tax identification number. In Indonesia, for non-bank e-money accounts of up to USD 110, customer identity is not recorded [1] [3]. In Haiti, the Central Bank allows two mobile money service providers, T-Cash by Voila and TchoTcho Mobile by Digicel, to offer entry-level accounts of up to USD 62 that do not require face-to-face registation [1] [2]. For several years, South Africa also has allowed remote registration for mobile banking, which requires submission of the individual’s national ID number. Transactions conducted via these accounts are capped at USD 146 per day [1].

By Natalie Baer, Research Associate

Sources and Additional Resources:

[1] “Mexico, Indonesia and Haiti Advance Financial Inclusion with Bold Approaches to Account Opening” by Ignacio Mas and Claire Alexandre, http://centerforfinancialinclusionblog.wordpress.com/2012/01/19/mexico-indonesia-and-haiti-advance-financial-inclusion-with-bold-approaches-to-account-opening/

[2] Tracking Mobile Money Use in Haiti,
http://technology.cgap.org/2011/11/22/tracking-mobile-money-use-in-haiti/

[3] Email discussions with Ignacio Mas, Consultant on technology-enabled models for financial inclusion

Browse the MicroCapital Universe and add your entry to the wiki at: http://www.microcapital.org/microfinanceuniverse/

MICROFINANCE PAPER WRAP-UP: Global Microscope on the Microfinance Business Environment 2011

Emilia Akonom — Thu, 09 Feb 2012 19:22:21 +0000

By the Economist Intelligence Unit, funded by The Multilateral Investment Fund, Corporación Andina de Fomento and the International Finance Corporation, October 2011, 72 pages, available at: http://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=36453519.

This paper examines the microfinance business environments in 55 countries, comparing them across three categories: supporting institutional framework, political stability, and regulatory framework and practices. It is the fifth annual paper in the series, covering the 12-month period through June 2011. The research comprises data collected in 21 countries of Latin America and the Caribbean, 11 countries of Sub-Saharan Africa, seven of Eastern Europe and Central Asia, seven of East Asia, five of South Asia and four of the Middle East and North Africa.

The authors argue that while microfinance has become more mature and sustainable, the global financial downturn lead to a downgrade in the quality of some loan portfolios resulting in the need for improvement, especially within risk management. The report benchmarks the regulatory framework and operating environment in each evaluated country. The factors included in the scoring are: regulation and supervision of microcredit portfolios, legal recognition for microfinance institutions (MFIs), regulatory and supervisory capacity for microcredit and other microfinance services, deposit policies, accounting transparency, client protection, credit bureaus and political stability.

The two countries of East and South Asia that are rated as having the most favorable conditions for microfinance operations are Pakistan and Philippines. Both receive strong scores for regulatory frameworks and are in the top ten positions in the overall ranking. Cambodia, ranked 13th, also has an advantageous environment for MFIs. There is an expectation of positive change in Thailand where the Ministry of Finance has appointed new body to deal with microfinance matters and the central bank eased regulations. In China, although the number of MFIs has been growing, the sector is still in the early stages of development. India’s ranking dropped due to new regulatory limits on interest rates and lending margins. Countries such as Sri Lanka and Vietnam are still in the process of formulating regulatory mechanisms for microfinace.

Countries of Eastern Europe and Central Asia generally occupy middle positions in the ranking. The position of the Kyrgyz Republic dropped nine spots to settle at 21 as the regime change in 2010 annulled plans for modernization of relevant law. Armenia and Bosnia focused their efforts on consumer protection, and both countries score highly for financial reporting standards.

Peru and Bolivia perform best in the ranking not only in Latin America and the Caribbean region but also globally. The authors of the ranking find that in Peru the sector benefits from a well-defined legal framework and effective supervisory capacity. On the other hand, microfinance in Bolivia continues to prosper regardless of civil unrest. As the operations environment for microfinance has improved in Mexico and Panama, both countries jumped in the ranking to finish in a tie at tenth place. Brazil climbed up twelve spots as a result of strong financial inclusion and innovations in agent banking. Trinidad and Tobago, Venezuela, Haiti and Argentina are among those occupying the bottom ten spots worldwide.

The growth of microfinance has decreased in a number of Arab countries due to political unrest. Current affairs had a particularly bad influence on the operating environment in Yemen. Despite clear regulation and rapid growth in the sector in Yemen over the last several years its rank this year sank 17 positions – still the best in the Middle East and North Africa. While Egypt’s legislation does not allow the provision of microcredit by non-bank commercial companies, Morocco has been boosting its investment climate for microfinance. On the other hand, Lebanon only lightly regulates with regards to microfinance.

Kenya scores the highest in Sub-Saharan Africa and is fourth in the global ranking. Neighboring Uganda finishes ninth globally and, alongside Pakistan and Philippines, is the leader of the category for regulatory framework and practices. Rwanda ranks 15th based on government support of microfinance activities, especially in rural areas. In Nigeria, the central bank revised its microfinance policy in April 2011 but faces difficulties with enforcement. The central banks also have issues with supervising MFIs in Democratic Republic of Congo, Ghana and Senegal. In Madagascar, the market size has increased and there is a comprehensive legal framework and a promotion unit, but serious transparency issues remain.

By Emilia Akonom, Research Associate

Sources and Additional Resources:

Global Microscope on the Microfinance Business Environment 2011 http://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=36453519

MicroCapital Universe Profile: Multilateral Investment Fund (MIF) http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Multilateral+Investment+Fund+%28MIF%29

MicroCapital Universe Profile: Corporación Andina de Fomento (CAF) http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Corporaci%C3%B3n+Andina+de+Fomento+%28CAF%29

MicroCapital Universe Profile: International Finance Corporation (IFC)http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=International+Finance+Corporation+%28IFC%29

MicroCapital.org story, October 23, 2011, MICROCAPITAL BRIEF: Peru Tops 2011 Global Microscope Index on Microfinance Business Environment http://www.microcapital.org/microcapital-brief-peru-tops-2011-global-microscope-index-on-microfinance-business-environment/

MicroCapital.org story, May 10, 2011, MICROCAPITAL BRIEF: Banko Sentral ng Pilipinas (BSP) Convenes Microfinance Stakeholders Summit Celebrating “Microscope” Ranking from the Economist http://www.microcapital.org/microcapital-brief-bangko-sentral-ng-pilipinas-bsp-convenes-microfinance-stakeholders-summit-celebrating-microscope-ranking-from-the-economist/

MicroCapital.org story, October 15, 2010, MICROCAPITAL BRIEF: The Economist Intelligence Unit “Microscope” Study Discusses Challenges to The Rapidly Growing Microfinace Industry http://www.microcapital.org/microcapital-brief-the-economist-intelligence-unit-microscope-study-discusses-challenges-to-the-rapidly-growing-microfinance-industry/

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MICROCAPITAL BRIEF: Indian Finance Ministry Clears Draft Microfinance Bill, Considers Engaging Post Office Banks to Promote Financial Inclusion

Kristha Abores — Wed, 08 Feb 2012 13:53:10 +0000

India’s finance ministry reportedly has cleared the draft of a microfinance bill following its public circulation for comments in July 2011 [1].The finance ministry has sent the draft to the law ministry for approval and is planning for the bill to be considered in the budget session of Parliament scheduled for mid-March [2]. The proposed legislation, which was covered in an August 2011 MicroCapital article, identifies the Reserve Bank of India as the sole regulator for the microfinance sector in the country, mooting state legislation such has been in effect in Andhra Pradesh since 2010 [3]. The bill is intended to help restore investor confidence in the sector [1].

In other news, the Indian government reportedly has drafted a plan to utilize India’s 155,000 post offices as banks, in an effort to support financial inclusion goals. A proposal has been sent to the finance ministry for approval and is expected to be implemented within the year. The proposal has the potential to significantly increase the coverage of the country’s banking network, particularly in the rural areas where 90 percent of post office branches are located [4]. The plan will add banking services such as loans and cheque facilities to India Post’s existing services, which include savings schemes which have reached a total outstanding balance of about INR 600,000 crore (USD 117 billion) [5].

By Kristha Abores, Research Associate

About Reserve Bank of India (RBI):

Established in 1935, the Reserve Bank of India (RBI) undertakes consolidated supervision of the financial sector comprising commercial banks, financial institutions and non-banking finance companies (NFBCs). The current focus of RBI is to supervise financial institutions, consolidate accounting standards, resolve legal issues in cases of banking fraud, monitor non-performing assets and supervise the rating model for the banking sector. In 1979, the National Bank for Agriculture and Rural Development (NABARD) was formed at the behest of RBI to provide regulatory oversight to regional rural banks (RRBs) and to promote the development of agricultural lenders: tasks that had been the responsibility of RBI. While all microfinance institutions (MFIs) and non-banking financial companies still operate under RBI regulations, the responsibility for inspecting nonprofit MFIs, agricultural lenders, RRBs, state cooperative banks, district central cooperative banks and state cooperative agricultural and rural development banks was transferred to NABARD. RBI maintains these responsibilities for for-profit MFIs. Although RBI was originally the parent organization of NABARD and until October 2010 held a 72.5 percent stake in the outfit, RBI owns a one-percent stake in NABARD as of 2011.

Sources and Additional Resources:

[1] LiveMint: “Finance ministry clears proposed national microfinance law,” http://www.livemint.com/2012/01/22225124/Finance-ministry-clears-propos….

[2] Business Today: “Budget 2012-13: Govt may introduce microfinance Bill,” http://businesstoday.intoday.in/story/budget-2012-13-microfinance-bill/1…

[3] MicroCapital Article, August 15, 2011, “MICROCAPITAL BRIEF: Indian Government Publishes Draft of Microfinance Institutions Bill, Would Make Reserve Bank of India (RBI) Sole Regulator, Establish Microfinance Development Council, Microfinance Development Fund,” http://www.microcapital.org/microcapital-brief-indian-government-publish…

[4] The Economic Times: “Eyes set on Post Office banks and liberalisation of sector,” http://articles.economictimes.indiatimes.com/2012-01-03/news/30584829_1_…

[5] The Hindu Business Line: “Banking on India Post,” http://www.thehindubusinessline.com/opinion/editorial/article2863226.ece

MicroCapital.org article, October 25, 2011, “MICROCAPITAL BRIEF: Indian Finance Ministry Proposes Microfinance Bill Allowing Deposit-Taking, Reserve Bank of India Opposed,” http://www.microcapital.org/microcapital-brief-indian-finance-ministry-p…

MicroCapital.org article, June 11, 2011: “MICROCAPITAL BRIEF: New Draft Bill From Ministry of Finance Would Expand Role of Reserve Bank of India (RBI) to Regulate Entire Indian Microfinance Sector, Cutting Roles of NABARD, State Governments”, http://www.microcapital.org/microcapital-brief-new-draft-bill-from-minis…

MicroCapital.org article, March 15, 2011, “MICROCAPITAL BRIEF: Federal Microfinance Bill May Replace Existing State Microfinance Legislation in India,” http://www.microcapital.org/microcapital-brief-federal-microfinance-bill…

MicroCapital Universe Profile: Reserve Bank of India (RBI), http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Res…

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MICROFINANCE PUBLICATION ROUND-UP: Poverty Scorecard for Afghanistan, Implementing Microfinance Information Systems, Improving Client Value from Microinsurance

Natalie Baer — Tue, 07 Feb 2012 17:54:28 +0000

“A Simple Poverty Scorecard for Afghanistan” by Mark Schreiner; published by Microfinance Risk Management LLC; January 2012; 117 pages; available at http://www.microfinance.com/#Afghanistan

Using data from Afghanistan’s “National Risk and Vulnerability Assessment 2007/8”, this scorecard estimates the probability that a household has expenditures below the poverty line using ten indicators that field agents can quickly collect and verify.

“Information Systems: A Practical Guide to Implementing Microfinance Information Systems” by Lauren Braniff and Xavier Faz; published by CGAP (Consultative Group to Assist the Poor); January 2012; 88 pages; available at http://www.cgap.org/gm/document-1.9.56237/TG_Information_Systems.pdf

This paper is technical guide that offers templates and tools to guide users through selecting and implementing management information systems.

“Improving Client Value From Microinsurance: Insights From India, Kenya, and the Philippines” by Michal Matul, Clemence Tatin-Jaleran and Eamon Kelly; published by International Labour Organization; September 2011; 49 pages; available at http://www.ilo.org/public/english/employment/mifacility/download/mpaper12_clientvalue.pdf?utm_source=EI29&utm_medium=Email&utm_campaign=EI

This paper analyses 15 microinsurance schemes using the International Labor Organization’s client value assessment tool, which is called PACE, based on its consideration of product, access, cost and experience. The PACE tool is intended to facilitate comparisons of the added value for clients among various insurance products and alternative means of protection such as informal risk-sharing practices.

By Natalie Baer, Research Associate

Sources and Additional Resources:

“A Simple Poverty Scorecard for Afghanistan” http://www.microfinance.com/#Afghanistan

“Information Systems: A Practical Guide to Implementing Microfinance Information Systems” http://www.cgap.org/gm/document-1.9.56237/TG_Information_Systems.pdf

“Improving Client Value From Microinsurance: Insights From India, Kenya, And The Philippines” http://www.ilo.org/public/english/employment/mifacility/download/mpaper12_clientvalue.pdf?utm_source=EI29&utm_medium=Email&utm_campaign=EI

Browse the MicroCapital Universe and add your entry to the wiki at: http://www.microcapital.org/microfinanceuniverse/

MICROCAPITAL BRIEF: Microfinance Banks Exempt from Nigeria’s Cash-Lite Cashless Banking System and Tax

Natalie Baer — Mon, 06 Feb 2012 18:20:29 +0000

The Central Bank of Nigeria (CBN) has exempted microfinance banks from participating in the Cash-Lite banking system in recognition of the challenges of training and persuading microfinance customers to use electronic and cashless banking services, such as automated teller machines (ATMs) and checks. As part of Cash-Lite, CBN has begun taxing withdrawals and deposits of over NGN 150,000 (USD 934) for individuals and NGN 1 million (USD 6,230) for businesses. Implementation of the program began in Lagos in January and a nationwide rollout is planned.

By Natalie Baer, Research Associate

About the Central Bank of Nigeria (CBN): The Central Bank of Nigeria (CBN) was established in 1958 as Nigeria’s central banking authority. As defined by the Act of Parliament that created CBN, its statutory mandates are as follows: “to issue legal tender currency; to maintain external reserves; to safeguard the international value of the legal tender currency; to promote monetary stability and a sound financial system in Nigeria; and to act as banker and financial adviser to the Federal Government.” As of July 2011, CBN reports total assets of NGN 8.37 trillion (the equivalent of USD 54 billion).

Sources and Additional Resources:

[1] CBN exempts microfinance banks,
http://www.thenationonlineng.net/2011/index.php/business/money/35232-cbn-exempts-microfinance-banks.html

MicroCapital.org story, January 22, 2012, MICROCAPITAL BRIEF: To Promote Electronic Payments, Central Bank of Nigeria Taxing Cash Transactions, http://www.microcapital.org/microcapital-brief-to-promote-electronic-payments-central-bank-of-nigeria-taxing-cash-transactions/

Browse the MicroCapital Universe and add your entry to the wiki at: http://www.microcapital.org/microfinanceuniverse/

MICROCAPITAL BRIEF: Credit Bureau Cambodia Launched to Facilitate Information Sharing Among Banks, Microfinance Institutions

Nisha Koul — Thu, 02 Feb 2012 08:30:27 +0000

The Association of Banks in Cambodia (ABC) and the Cambodian Microfinance Association (CMA), two trade associations with a combined membership of 64 financial institutions, have formed a joint venture with New Zealand-based credit bureau developer Veda Advantage to launch the Credit Bureau (Cambodia) Company Limited (CBC), which will maintain a database of credit information intended to help banks and microfinance institutions (MFIs) in making “accurate loan decisions based on borrower’s positive and negative credit history” [1]. The bureau expects to benefit borrowers with faster processing times, lower interest rates for those with positive credit histories and protection from over-indebtedness. The credit bureau has been in the planning stages since 2008 and was originally envisioned to be launched in 2010.

Under an existing law intended to facilitate credit reporting and information sharing among banks and MFIs, a code of conduct has been developed that outlines what information banks and MFIs must share with CBC and enumerating the rights of consumers to ensure that all credit data is accurate. CBC estimates that the first consolidated credit reports will be available to member institutions in February.

By Nisha Koul, Research Associate

About Association of Banks in Cambodia (ABC): The Association of Banks in Cambodia (ABC) was formed in 1994 to represent Cambodia’s private banking sector. According to its website, as of January 30, 2012, ABC’s membership includes 29 commercial banks, 7 specialized banks and the members of the Cambodia Microfinance Association (CMA).

About Cambodian Microfinance Association (CMA): The Cambodian Microfinance Association (CMA) is a nongovernmental organization (NGO) that was established in 2004 by seven microfinance institutions (MFIs). According to its website, as of January 30, 2012, CMA has 28 active members. Its main function is to strengthen communication between MFIs and other groups such as government authorities, donors, creditors and investors.

About Veda Advantage: Veda Advantage is a private company that provides business solutions, data analytics and risk management tools for individuals and companies. Veda Advantage was established in New Zealand in 1967 and provides credit-related services, focusing on the development of credit bureaus. Through its international division, Veda Advantage has supported credit bureaus in Cambodia, New Zealand, Saudi Arabia, Singapore and Malaysia. Financial information on Veda Advantage is not currently available.

About National Bank of Cambodia (NBC): Established in 1954, the National Bank of Cambodia (NBC) is the country’s central bank. Among its functions, the NBC establishes and monitors the country’s monetary policy, supervises and regulates the financial sector and issues currency.

Sources and Additional Resources:

[1] Credit Bureau Cambodia, News, “New Credit Bureau to make Cambodia more competitive,” http://www.creditbureaucambodia.com/cambodian-credit-news/new-credit-bureau-to-make-cambodia-more-competitive.html

MicroCapital.org story, May 10, 2011, “MICROCAPITAL BRIEF: National Bank of Cambodia (NBC), Supported by International Finance Corporation (IFC), Targets Multiple Borrowing by Microfinance Clients, Expects to Launch National Credit Bureau in 2011,” http://www.microcapital.org/microcapital-brief-national-bank-of-cambodia-nbc-supported-by-international-finance-corporation-ifc-targets-multiple-borrowing-by-microfinance-clients-expects-to-launch-national-credit-bureau-2/

MicroCapital.org story, May 27, 2011, “MICROCAPITAL BRIEF: Microfinance in Cambodia Grows 10%, Described as “Trap,” http://www.microcapital.org/microcapital-brief-microfinance-in-cambodia-grows-10-described-as-%E2%80%9Ctrap%E2%80%9D/

MicroCapital.org story, October 27, 2008, “MICROCAPITAL STORY: Cambodian Credit Bureau To Be Launched for Regulating Banking and Microfinance,” http://www.microcapital.org/microcapital-storycambodian-credit-bureau-to-be-launched-for-regulating-banking-and-microfinance/

MicroCapital Universe Profile: Association of Banks in Cambodia (ABC), http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Association+of+Banks+in+Cambodia+%28ABC%29

MicroCapital Universe Profile: Cambodian Microfinance Association (CMA), http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Cambodian+Microfinance+Association+%28CMA%29

MicroCapital Universe Profile: Veda Advantage, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Veda+Advantage

MicroCapital Universe Profile: National Bank of Cambodia (NBC), http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=National+Bank+of+Cambodia+%28NBC%29

Browse the MicroCapital Universe and add your entry to the wiki at http://www.microcapital.org/microfinanceuniverse/

MICROCAPITAL BRIEF: Microfinance CEO Working Group Issues Road Map for Microfinance Industry Promoting Smart Campaign, Microfinance Transparency, Social Performance Task Force

Charlotte Newman — Thu, 26 Jan 2012 16:42:26 +0000

A group of eight CEOs of nonprofit microfinance organizations has issued a “Road Map for the Microfinance Industry: Focusing on Responsible and Client-Centered Microfinance.” The road map suggests that the industry improve its standards of responsibility to clients through “principles and procedures that ensure ethical, transparent business and client safety.” It also recommends that the microfinance industry create measurable social and economic value for its clients by offering a range of services based on client needs. The report further highlights the support of the signatories for three US-based initiatives: the Smart Campaign, which aims to protect the interests of microfinance clients; MicroFinance Transparency, a nongovernmental organization working to increase the transparency of MFI pricing; and the Social Performance Task Force, group founded by CGAP (Consultative Group to Assist the Poor) that works to promote social values in microfinance [2].

The CEOs signing the letter represent UK-based VisionFund International and the following US-based nonprofit organizations: ACCION International, FINCA International, Freedom from Hunger, Grameen Foundation USA, Opportunity International, Pro Mujer and Women’s World Banking. At the moment, the Center for Financial Inclusion at ACCION International is the secretariat for the Working Group [1]. The Center for Financial Inclusion also hosts the Smart Campaign.

The Working Group members ask their fellow microfinance stakeholders to join them in supporting the three campaigns, putting their principles into action and working to develop improved ways to provide services to poor people.

By Charlotte Newman, Research Associate

Sources and Additional Resources:

[1] The Center for Financial Inclusion Blog: “Microfinance CEOs Unite on Road Map to Responsible Microfinance,” http://centerforfinancialinclusionblog.wordpress.com/2012/01/18/microfinance-ceos-unite-on-road-map-to-responsible-microfinance/

[2] “Road Map for the Microfinance Industry: Focusing on Responsible and Client-Centered Microfinance,” http://centerforfinancialinclusionblog.files.wordpress.com/2012/01/microfinance-ceo-working-group-road-map_120118_final.pdf

MicroCapital Universe Profile: ACCION International
http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=ACCION+International

MicroCapital Universe Profile: FINCA International
http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=FINCA+International

MicroCapital Universe Profile: Freedom from Hunger
http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=freedom+from+hunger#Description_140_word_limit_

MicroCapital Universe Profile: Grameen Foundation
http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Grameen+Foundation

MicroCapital Universe Profile: Opportunity International
http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Opportunity+International

MicroCapital Universe Profile: Pro Mujer http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Pro+Mujer

MicroCapital Universe Profile: VisionFund International http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=VisionFund+International

MicroCapital Universe Profile: Women’s World Banking
http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Women%27s+World+Banking+%28WWB%29

MicroCapital Universe Profile: Smart Campaign
http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=SMART+Campaign

MicroCapital Universe Profile: Microfinance Transparency
http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Microfinance+Transparency

MicroCapital Universe Profile: Social Performance Task Force
http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Social+Performance+Task+Force

Browse the MicroCapital Universe and add your entry to the wiki at http://www.microcapital.org/microfinanceuniverse/

MICROCAPITAL BRIEF: Central Bank of Uzbekistan Raises Minimum Capital Requirements for Microcredit Organizations

Nisha Koul — Tue, 24 Jan 2012 14:15:53 +0000

The Central Bank of Uzbekistan, the country’s central banking authority, has increased the minimum amount of charter capital required of microcredit organizations (MCOs) to the local currency equivalent of USD 129,000 [1]. The previous requirements were the equivalent of USD 25,800 for MCOs registered in the capital city of Tashkent and USD 12,900 for MCOs in other parts of the country. MCOs have until January 1, 2013, to comply with the new requirements.

As of October 2011, 34 MCOs operate in Uzbekistan under the country’s microfinance law with microloans to individuals amounting to UZS 22.5 billion (USD 12.6 million) and loans to organizations amounting to UZS 2.8 billion (USD 1.6 million). As of December 2010, US-based nonprofit Microfinance Information Exchange (MIX) reports 34 lenders in Uzbekistan – including banks that engage in microlending – that have microloans of USD 149 million outstanding to 96,500 borrowers.

By Nisha Koul, Research Associate

Sources and Additional Resources:

[1] UzDaily, “Microcredit organizations had to raise charter capitals to 100,000 euros,” http://www.uzdaily.com/articles-id-17006.htm

MicroCapital.org story, December 13, 2011, “MICROCAPITAL BRIEF: 34 Microfinance Institutions Now Operating Under Uzbekistan Microcredit Law,” http://www.microcapital.org/microcapital-brief-34-microfinance-institutions-now-operating-under-uzbekistan-microcredit-law/

MicroCapital.org story, May 23, 2011, “MICROCAPITAL BRIEF: United Nations Development Program (UNDP) Convenes Discussion On Amending Microfinance Regulations in Uzbekistan,” http://www.microcapital.org/microcapital-brief-united-nations-development-program-undp-convenes-discussion-on-amending-microfinance-regulations-in-uzbekistan/

Browse the MicroCapital Universe and add your entry to the wiki at http://www.microcapital.org/microfinanceuniverse/

MICROCAPITAL BRIEF: Cambodian Government: Microfinance Interest Rates of Up to 50 Percent Threaten Loss of Land, “Social Instability”

Natalie Baer — Mon, 23 Jan 2012 14:07:47 +0000

Cambodian government officials reportedly are looking to negotiate down the interest rates on microfinance loans, arguing that current rates are unsustainable for the country’s rural farming population and that defaults are causing many farmers to become landless. [1] The Cambodia Rural Development Bank, an autonomous public enterprise established by the government to fund microfinance institutions (MFIs), is negotiating with the 10 institutions it supports to lower rates. [1] [3] Meanwhile, MFIs argue that rural customers understand interest rates and that if rates were too high, they would go to other lenders. However, operating costs for MFIs also remain high, since farmers consult individually for loans rather than borrowing in groups, and much of MFIs’ funding comes from overseas, which is more expensive than local funding. [1]

According to the Cambodia Microfinance Association, a trade association of 26 MFIs, the aggregate gross loan portfolio of its members has increased almost 20 percent since December 2008 to USD 510 million as of March 2010. [2] Loan size averaged USD 500. [1]

By Natalie Baer, Research Associate

About the Cambodian Microfinance Association: The Cambodian Microfinance Association (CMA) is an NGO that was formally established in 2004 by seven microfinance institutions (MFIs). As of May 26, 2011, CMA has 26 active members. Its main function is to strengthen communication among MFIs and other groups such as government authorities, donors, creditors and investors.

Source and Resources:

[1] “Debt fears for farmers Calls for lower microfinance rates”
http://www.phnompenhpost.com/index.php/2012011153889/Business/debt-fears-for-farmers-calls-for-lower-microfinance-rates.html

[2] Mix Market: Microfinance in Cambodia
http://www.mixmarket.org/mfi/country/Cambodia/report

[3] Cambodia Rural Development Bank http://www.rdb.com.kh/data/about%20RDB.htm

MicroCapital Universe Profile: Cambodian Microfinance Association http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Cambodian+Microfinance+Association+%28CMA%29#Description_140_word_limit_

Browse the MicroCapital Universe and add your entry to the wiki at: http://www.microcapital.org/microfinanceuniverse/

MICROCAPITAL BRIEF: To Promote Electronic Payments, Central Bank of Nigeria Taxing Cash Transactions

Kristha Abores — Sun, 22 Jan 2012 06:04:45 +0000

The Central Bank of Nigeria has begun taxing cash withdrawals and deposits that exceed NGN 150,000 (USD 931) per day for individuals and NGN 1,000,000 (USD 6,205) per day for corporations [1]. The scheme is aimed at reducing the amount of physical cash circulating in the economy, encouraging more electronic-based transactions as well as minimizing issues related to security, cash management and money laundering. [1,2] The program is also expected to drive financial inclusion via mobile phones, which under-banked and unbanked Nigerians own [1,3].

The fee system, which is in place on a pilot basis in Lagos state, is expected to cost CBN approximately NGN 2.5 billion (USD 15.5 million) [1, 4]. However, CBN Governor Sanusi Lamido Sanusi reportedly said that the policy is designed to reduce the cost of handling cash, which is expected to reach approximately NGN 192 billion (USD 1.19 billion) in 2012. He was quoted as having said, “The target is getting the cost reduced by 30 per cent in three years through enforcement of four-pronged initiatives – namely reduction in cash management cost, enhanced electronic payment system, Information Technology (IT) and centralised back-office systems.” [2]

By Kristha Abores, Research Associate

About Central Bank of Nigeria (CBN):
The Central Bank of Nigeria (CBN) was established in 1958 as Nigeria’s central banking authority. As defined by the Act of Parliament that created CBN, its statutory mandates are as follows: “to issue legal tender currency; to maintain external reserves; to safeguard the international value of the legal tender currency; to promote monetary stability and a sound financial system in Nigeria; and to act as banker and financial adviser to the Federal Government.” As of July 2011, CBN reports total assets of NGN 8.37 trillion (the equivalent of USD 54 billion).

Sources and Additional Resources:

[1] “Further Clarifications On Cash-Less Lagos Project,” http://www.cbn.gov.ng/cashless/

[2] “Banks Fortify E-Payment Solutions for Cashless Policy,” http://www.thenationonlineng.net/2011/index.php/business/money/32782-ban…

[3] “Entrenching Cashless Economy Through Secure, Affordable Mobile Money Solutions,”http://www.businessdayonline.com/NG/index.php/markets/companies-and-mark…

[4] “Cashless Lagosto Cost CBN, Banks over N2.5billion,” http://www.thisdaylive.com/articles/cashless-lagos-to-cost-cbn-banks-ove…

MicroCapital.org article, January 9, 2012, “MICROCAPITAL BRIEF: Nigeria’s National Association of Microfinance Banks (NAMB) Asks Government Not to Set Up Microlenders,” http://www.microcapital.org/microcapital-brief-nigerias-national-associa…

MicroCapital.org article, December 20, 2011, “MICROCAPITAL BRIEF: Fortis Mobile Money to Enable Mobile Phone Banking for 180 Members of Nigeria’s National Association of Microfinance Banks, Lagos State Chapter (NAMBLAG),” http://www.microcapital.org/microcapital-brief-fortis-mobile-money-to-en…

MicroCapital.org article, October 4, 2011, “MICROCAPITAL BRIEF: Central Bank of Nigeria Approves New Capital Base Requirements for Microfinance Banks (MFBs), MFBs Await Capital Verification Results,” http://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-a…

MicroCapital.org article, September 7, 2011, “MICROCAPITAL BRIEF: Central Bank of Nigeria Issues Mobile Money Operating Licenses to Affiliate of Fortis Microfinance Bank, 10 Other Companies,” http://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-i…

MicroCapital.org article, June 28, 2011, “MICROCAPITAL BRIEF: Central Bank of Nigeria (CBN) Looking to Set New Capital Base Requirements for Microfinance Banks (MFBs),” http://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-c…

MicroCapital’s Universe Profile: Central Bank of Nigeria (CBN), http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Cen…

Browse the MicroCapital Universe and add your entry to the wiki at: http://www.microcapital.org/microfinanceuniverse/